Low-cost servers still face battle

GROWTH SECTOR:A consultancy said the global server market is to grow 3.9 percent next year, while the number of servers shipped by local vendors is set to rise 6.6 percent

Staff writer, with CNA

Server computers using chips licensed by British chip designer ARM Holdings PLC might not break into the mainstream market this year, despite interest from Google Inc and Facebook Inc, a local analyst said.

“ARM [architecture] is a viable option for low-computing power servers sold at a lower price,” he said.

“However, at this point in time we think that such a product is unlikely to break into the mainstream market,” he added.

ARM design, which is known for its low power consumption, might be suitable for small and medium-sized server vendors that have fewer performance-related requirements, including those in Taiwan, the analyst said.

Another potential business model for ARM servers is demand from Google and Facebook, who tend to skip branded server vendors and place orders for data centers directly with contract manufacturers, Chou said.

However, Google or Facebook might not be willing, nor have enough resources to support ARM servers, because the practice of ordering non-branded servers is in its infancy and its efficacy is yet to be proved, he added.

MIC has forecast that the worldwide server market will grow 3.9 percent next year to 9 million units, while the number of servers shipped by Taiwanese vendors is set to rise 6.6 percent to 5.4 million units.

Tech tracking firm International Data Corp (IDC) said worldwide server market revenue slipped 7.7 percent to US$10.9 billion during the first quarter of this year compared with the previous year, marking the fifth time in the past six quarters that the server market experienced an annual decline in revenue.

“Customer demand for new servers is being impacted by ongoing server consolidation, technology transitions and challenging macroeconomic conditions across the globe,” Matt Eastwood, IDC group vice president and general manager of enterprise platforms said.

“It is clear that challenging market conditions are increasing the competitive dynamics for the server market share globally, particularly since computers represent a critical element in the larger IT transformation that continue to reshape broader enterprise IT market opportunities,” he wrote in a report on Wednesday last week.